Montréal-based cleantech startup Relocalize has secured a $2.3-million CAD seed extension from Desjardins Capital and existing backer RGS Ice to hasten the development and deployment of its technology-powered micro-factories.
This equity funding brings the size of Relocalize’s seed round to $5.8 million, a figure that includes $3.5 million raised last fall from Québec City’s i4 Capital, Toronto-based Waterpoint Lane, and California’s RGS Ice.
In an interview with BetaKit, Relocalize co-founder and CEO Wayne McIntyre noted that food is one of the largest sources of global greenhouse gas emissions and its transportation accounts for a significant portion of this total. Relocalize aims to help grocery retailers tackle this problem and save money with “hyper-local” production.
“Our vision is, wherever possible, don’t put [food] on a truck at all.”
The startup’s autonomous micro-factories, which are powered by a combination of proprietary software and off-the-shelf hardware, are housed inside shipping containers designed to be set up at existing grocery distribution centres.
By co-locating the manufacturing and packaging of food-related items with distribution, Relocalize aims to cut middle-mile transportation—and the environmental and financial costs associated with it—out of the equation altogether.
“We’re trying to make that portion of the food system’s carbon emissions go away,” said McIntyre. “There are a lot of companies pursuing that same opportunity—for example, electrification of trucking … Our vision is, wherever possible, don’t put [food] on a truck at all.”
This seed extension, which closed in April, brings the startup’s total funding to $9.9 million. According to McIntyre, it came at the same terms as Relocalize’s initial seed round. He declined to disclose the firm’s valuation.
Relocalize has focused its initial efforts on the packaged ice market. McIntyre noted that in the beverage and ice markets, logistics represent the single highest cost for manufacturers. Compared to the bigger and more competitive beverage space, which he called a “bloodsport,” ice offered an easier entry point for Relocalize.
“What we really liked about the ice market is we knew it was broken,” said McIntyre.
The CEO noted that the ice market is large, dominated by geographic monopolies, and expensive from both a trucking costs and carbon-emissions perspective. For these reasons, many retailers Relocalize consulted with considered making their own, but walked away from the idea after realizing how difficult packaged ice was to produce.
To start, Relocalize has focused its efforts on the largest ice market: the southern United States (US), and Florida specifically. In the southern US, where the weather is typically hot for most of the year, ice is particularly important. “It’s how people keep their food cold after a disaster like a hurricane,” said McIntyre.
As natural disasters like this become increasingly common, Relocalize sees an opportunity to help large retailers “de-risk” and decentralize their ice supply by helping them build a network of micro-factories. “You may have some production go down right in the path of that hurricane, but now the rest of the network can pick up the slack,” said McIntyre.
With its prior funding, Relocalize built a small-scale micro-factory prototype in Jacksonville, Florida in partnership with Southeastern Grocers. According to McIntyre, this trial has been successful, enabling the production of packaged ice for local supermarkets across the state.
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This latest capital will go toward scaling this small proof-of-concept into a “full-scale, commercially viable production system” with investments in research and development and production engineering. Relocalize aims to deliver a full prototype by the end of 2024.
To get there, Relocalize plans to double the size of its engineering team. Once its tech is ready, the startup plans to grow with Southeastern Grocers and expand to serve other large retailers across the US and Canada in the ice market.
“We have a lot of pull from the market right now, and it’s really because we can make [packaged ice] cheaper, we can make it better, and we can make it greener, and that’s something that’s really hard for food retailers to get from their supply chain right now,” McIntyre claimed.
For now, Relocalize’s focus is on ice, but over the long run, McIntyre believes that the tech the startup is developing has the potential to make a difference in other food-related areas, with beverages as the likely next step.
McIntyre hopes to see more companies join Relocalize and explore ways to make other foods “hyper-locally” and reduce the carbon footprint associated with current production processes.
Feature image courtesy Relocalize.